**5. Impacts of green banking to create green businesses**

Since 1987 to achieve sustainable development, many new movements have been introduced; few of those were green economy, green growth, low-carbon

development [13], millennium development goals, green financing, etc.; however, participation in those movements was nonbinding and voluntary in nature. Therefore, desired outcomes were difficult to attain; hence, in 2015, a binding agreement among world leaders has been signed, named as Paris climate agreements. After signing the agreement, introducing green banking became mandatory by all signing nations [14]. Binding regulation and strong enforcement of it really has a great impact on business as well as economy; the best example is Bangladesh. Atiur Rahman, known as a green governor, inaugurated green banking policy and guidelines in 2011 and strictly followed up that banks and nonbank financial institutions implemented the policy accordingly [15, 16]. Consequently all 60 banks and 34 nonbank financial institutions now have their own green banking units, inhouse green activities, and publishing green reports [17]. Therefore, strict regulation, its enforcement, and regular follow-up can ensure proper implementation of green banking. The outcome of green banking is green businesses, and the spread of green businesses can move the economy to green economy. In a nutshell, the green banking policy and guideline currently known as sustainable banking policy introduced by Bangladesh Bank, the central bank of the country, are presented here.

Green banking policy introduced by Bangladesh central bank involves in a twosplit approach: Firstly, green banking emphasizes on greening the internal operations of all banks. It means all the banks need to adopt to suitable ways of utilizing renewable energy, automation, and other procedures to lessen environmental degradation situations from banking activities. Secondly, banks should approve environmentally responsible financing; before making any financing decision, they should maintain environmental risk rating and support and foster growth of "green" initiatives and projects.

In-house green activities include reducing dependency on grid power by shifting to the use of solar power and other renewable energy sources to the maximum feasible extent; following green architecture while constructing bank offices; using energysaving technologies such as light emitting diodes (LED), compact fluorescent lamp (CFL), etc.; using energy-efficient digital devices; reducing use of paper by adoption of online automated work practices; and conducting energy audit regularly to monitor carbon footprint.

Green activities in financing include carry out environmental risk assessment of projects, financing only those that meet environmental safeguards/sustainability guidelines; provide green loan to promote solar energy, biogas plants, effluent treatment plants, and other energy-saving output practices like Hybrid Hoffman kilns in brick fields; develop green banking products for clients; promote growth of mobile banking and online banking; and include environmental sustainability support initiatives in corporate social responsibility (CSR) programs, inter alia including financial support to climate risk fund.

Bangladesh Bank green policies and guidelines are divided into three phases. In phase-I, individual bank should develop their own green banking policies and display general commitment on the environment through in-house performance. Under phase-II, banks are responsible to create environmental policies and guidelines for different environmental-sensitive sectors. In phase-III, banks are likely to address environment-friendly initiatives and introduce innovative products by considering the whole ecosystem in their decision-making process and publish independent green annual report following standard formatting [16].

Green banking helps create green businesses; according to Bangladesh Bank green policy, there are 11 categories of green business such as renewable energy, energy efficiency, solid waste management, liquid waste management, alternative energy, fire burnt brick, non-fire block brick, recycling and recyclable product, green industry, safety and security of factories, and miscellaneous. Among these

**95**

*Green Banking*

*DOI: http://dx.doi.org/10.5772/intechopen.93294*

businesses improve their communities.

Shariah, and green banking.

**6.1 Islamic banking**

categories, there are 47 product lines, and these are projects financed having environmental treatment plant (ETP), biogas plant, solar home system and solar panel trades, and bio-fertilizer plant and projects financed having tunnel kiln, installation of zigzag kiln, waste and hazard disposal plants, waste paper recycling plant, waste battery recycling plants, financing of LED bulb production, PET bottle recycling plant, safe/clean water supply projects, improved cooking stove (Bondhu Chula), green finance at zero rate of interest, electricity generation from rice husk, rice bran oil production; etc. Both the conventional and Islamic banks are bound to finance

Green businesses adopt principles, policies, and practices that improve the quality of life for their customers, employees, communities, and the planet. Green businesses are socially and environmentally responsible and challenge themselves to bring the goals of social and economic justice, environmental sustainability, as well as community health and development, into all their activities—from production and supply chain management to employee relations and customer service. Green

Principally, the idea of green banking that is originated from sustainable development concept aims to guarantee the highest utilization of natural resources as well as minimum dependency on artificial resources which is made by polluting atmosphere, ultimately impacting mankind as well as the environment. Islamic banking and green banking are not incompatible; in fact they are in line and supplementary to each other. The green banking concept originated from sustainable development concept that cares to nature and focuses on maintaining ecological balance, the Maqasid of Islamic banking is to guarantee divine principle in worldly transactions, and many of the divine principles are related to caring to nature and natural resources; hence, there is a connection between Islamic banking, Maqasid

Islamic banking has significant synergies with the green economy concept and fits in well with the ethical requirements of green projects. As such, environmental protection and sustainability align strongly with the Islamic banking agenda that seeks to enhance the general welfare of society. Protection of the planet and the environment is clearly in conformity with Maqasid Shariah as well as with the goals of sustainable development. In this context, Islamic finance offers promising

Islamic banking as a faith-based idea has come of age. Finance professionals view it largely as asset-based finance that is free from the elements of unjust and speculative gains. It involves use of a range of tools that create equities, participation, and ownership. Islamic bankers use them or combinations thereof for financing the needs of economic units, such as the government, the corporate, and the household sectors in the economy. Islamic finance has experienced steady growth over the past four decades as more and more countries and markets have come forward to experiment with this faith-based idea. The frenetic pace of growth has, however, raised

Theoretically, Islamic finance is resilient to shocks because of its risk sharing, limit on excessive risk taking, and strong link to real activities; however, empirically stability of Islamic banks is so far mixed. Islamic banks face similar risks as

instruments that can provide solutions to financing climate change [19].

concerns about a possible mission implication [20].

these projects and plants as these are classified as green projects [18].

**6. Islamic banking, Maqasid Shariah, and green banking**

#### *Green Banking DOI: http://dx.doi.org/10.5772/intechopen.93294*

*Banking and Finance*

"green" initiatives and projects.

financial support to climate risk fund.

tor carbon footprint.

development [13], millennium development goals, green financing, etc.; however, participation in those movements was nonbinding and voluntary in nature. Therefore, desired outcomes were difficult to attain; hence, in 2015, a binding agreement among world leaders has been signed, named as Paris climate agreements. After signing the agreement, introducing green banking became mandatory by all signing nations [14]. Binding regulation and strong enforcement of it really has a great impact on business as well as economy; the best example is Bangladesh. Atiur Rahman, known as a green governor, inaugurated green banking policy and guidelines in 2011 and strictly followed up that banks and nonbank financial institutions implemented the policy accordingly [15, 16]. Consequently all 60 banks and 34 nonbank financial institutions now have their own green banking units, inhouse green activities, and publishing green reports [17]. Therefore, strict regulation, its enforcement, and regular follow-up can ensure proper implementation of green banking. The outcome of green banking is green businesses, and the spread of green businesses can move the economy to green economy. In a nutshell, the green banking policy and guideline currently known as sustainable banking policy introduced by Bangladesh Bank, the central bank of the country, are presented here. Green banking policy introduced by Bangladesh central bank involves in a twosplit approach: Firstly, green banking emphasizes on greening the internal operations of all banks. It means all the banks need to adopt to suitable ways of utilizing renewable energy, automation, and other procedures to lessen environmental degradation situations from banking activities. Secondly, banks should approve environmentally responsible financing; before making any financing decision, they should maintain environmental risk rating and support and foster growth of

In-house green activities include reducing dependency on grid power by shifting to the use of solar power and other renewable energy sources to the maximum feasible extent; following green architecture while constructing bank offices; using energysaving technologies such as light emitting diodes (LED), compact fluorescent lamp (CFL), etc.; using energy-efficient digital devices; reducing use of paper by adoption of online automated work practices; and conducting energy audit regularly to moni-

Green activities in financing include carry out environmental risk assessment of projects, financing only those that meet environmental safeguards/sustainability guidelines; provide green loan to promote solar energy, biogas plants, effluent treatment plants, and other energy-saving output practices like Hybrid Hoffman kilns in brick fields; develop green banking products for clients; promote growth of mobile banking and online banking; and include environmental sustainability support initiatives in corporate social responsibility (CSR) programs, inter alia including

Bangladesh Bank green policies and guidelines are divided into three phases. In phase-I, individual bank should develop their own green banking policies and display general commitment on the environment through in-house performance. Under phase-II, banks are responsible to create environmental policies and guidelines for different environmental-sensitive sectors. In phase-III, banks are likely to address environment-friendly initiatives and introduce innovative products by considering the whole ecosystem in their decision-making process and publish

Green banking helps create green businesses; according to Bangladesh Bank green policy, there are 11 categories of green business such as renewable energy, energy efficiency, solid waste management, liquid waste management, alternative energy, fire burnt brick, non-fire block brick, recycling and recyclable product, green industry, safety and security of factories, and miscellaneous. Among these

independent green annual report following standard formatting [16].

**94**

categories, there are 47 product lines, and these are projects financed having environmental treatment plant (ETP), biogas plant, solar home system and solar panel trades, and bio-fertilizer plant and projects financed having tunnel kiln, installation of zigzag kiln, waste and hazard disposal plants, waste paper recycling plant, waste battery recycling plants, financing of LED bulb production, PET bottle recycling plant, safe/clean water supply projects, improved cooking stove (Bondhu Chula), green finance at zero rate of interest, electricity generation from rice husk, rice bran oil production; etc. Both the conventional and Islamic banks are bound to finance these projects and plants as these are classified as green projects [18].

Green businesses adopt principles, policies, and practices that improve the quality of life for their customers, employees, communities, and the planet. Green businesses are socially and environmentally responsible and challenge themselves to bring the goals of social and economic justice, environmental sustainability, as well as community health and development, into all their activities—from production and supply chain management to employee relations and customer service. Green businesses improve their communities.
